INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Agreement made the 11th day of December, 1996, by and between KEYSTONE
PRECIOUS METALS HOLDINGS, INC. (hereinafter sometimes called the "Fund"), a
Delaware corporation, and KEYSTONE INVESTMENT MANAGEMENT COMPANY (hereinafter
sometimes called the "Investment Adviser"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Fund and the Investment Adviser wish to enter into an
Agreement setting forth the terms on which the Investment Adviser will perform
certain services for the Fund.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Adviser agree as follows:
1. The Fund hereby employs the Investment Adviser to manage the investment
and reinvestment of the assets of the Fund, subject to the supervision of the
Board of Directors of the Fund, for the period and on the terms in this
Agreement set forth. The Investment Adviser hereby accepts such employment and
agrees during such period, at its own expense, to render the services and to
assume the obligations herein set forth, for the compensation herein provided.
The Investment Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
2. The Investment Adviser, at its own expense, shall furnish to the Fund
office space in the offices of the Investment Adviser or in such other place
as may be agreed upon by the parties from time to time, and all necessary
office facilities, equipment and personnel for managing the investment and
reinvestment of the assets of the Fund, and shall arrange, if desired by the
Fund, for members of the Investment Adviser's organization to serve without
salaries from the Fund as officers or as agents of the Fund. The Investment
Adviser assumes and shall pay or reimburse the Fund for: (1) the compensation
(if any) of the Directors of the Fund who are affiliated persons (as such term
is defined in the Investment Company Act of 1940, as amended) of the
Investment Adviser and of all officers of the Fund as such, and (2) all
expenses of the Investment Adviser and the Fund incurred for the management of
the investment and reinvestment of the assets of the Fund, including any fee
for services paid to any Sub-Investment Adviser appointed pursuant to
paragraph 6 hereunder. The Fund assumes and shall pay all other expenses of
the Fund, including, without limitation: (1) all charges and expenses of any
custodian or depository appointed by the Fund for the safekeeping of its cash,
securities and other property; (2) all charges and expenses for bookkeeping
and auditors; (3) all charges and expenses of any transfer agents and
registrars appointed by the Fund; (4) all fees of all Directors of the Fund
who are not affiliated persons (as such term is defined in the Investment
Company Act of 1940, as amended (the "Act")) of the Investment Adviser or any
Sub-Investment Adviser appointed pursuant to paragraph 6 hereunder; (5) all
broker's fees, expenses and commissions and issue and transfer taxes
chargeable to the Fund in connection with transactions involving securities
and other property to which the Fund is a party; (6) all taxes and corporate
fees payable by the Fund to federal, state or other governmental agencies; (7)
all costs of stock certificates representing shares of the Fund; (8) all fees
and expenses involved in registering and maintaining registrations of the Fund
and of its shares with the Securities and Exchange Commission and registering
or qualifying its shares under state or other securities laws including the
preparation and printing of prospectuses for filing with said Commission and
other authorities (but not the expense of preparing any sales literature or of
printing the same or of printing any prospectus for use in selling Fund
shares, which expenses neither party undertakes by this agreement to bear);
(9) all expenses of shareholders' and Directors' meetings and of preparing and
printing reports to shareholders dealing with the shareholders; and (10) all
charges and expenses of legal counsel for the Fund in connection with legal
matters relating to the Fund, including, without limitation, legal services
rendered in connection with the Fund's corporate existence, corporate and
financial structure and relations with its shareholders, registrations and
qualifications of securities under federal, state and other laws, issues of
securities and expenses which the Fund has herein assumed. In the event the
Investment Adviser provides any services (excluding printing) involved in
registering and maintaining registrations of the Fund and of its shares with
the Securities and Exchange Commission or any services involved in preparing
reports to shareholders, the Fund will promptly reimburse the Investment
Adviser therefor on a cost basis.
The services of the Investment Adviser to the Fund hereunder are not to be
deemed exclusive, and the Investment Adviser shall be free to render similar
services to others.
3. As compensation for the Investment Adviser's services during the period
of this Agreement, the Fund will pay to the Investment Adviser a fee at the
annual rate of 3/4 of 1% of the first $100,000,000, 5/8 of 1% of the next
$100,000,000 and 1/2 of 1% of the excess over $200,000,000 of the average of
the daily net asset values of the Fund computed as of the close of business on
each business day. Such fee shall be reduced by the amount of any compensation
paid to the Investment Adviser by or on behalf of the Fund's wholly owned
subsidiaries in consideration for services rendered in connection with the
investment and reinvestment of the assets of such subsidiaries.
A pro rata portion of the fee shall be payable in arrears at the end of
each calendar month or fiscal quarter of the Fund as the Investment Adviser
may from time to time specify in writing to the Fund. If this Agreement
terminates other than at the end of a fiscal year of the Fund, any
compensation payable hereunder for the period ending with the date of such
termination shall be payable upon such termination.
Notwithstanding the foregoing, the Investment Adviser agrees to bear any
expenses of the Fund which would cause the Fund to exceed in any fiscal year
the most restrictive expense limitation applicable to the Fund under state law
or regulation and agrees to seek and obtain the approval of a majority of the
Directors of the Fund who are not interested persons (as that term is defined
in the Act) of the Investment Adviser or the Fund before requesting the Fund
to withdraw from offering its shares in any state in which the Fund is
presently offering its shares.
4. The Fund shall cause its books and accounts to be audited at least once
each year by a reputable, independent public accountant or organization of
public accountants who shall render a report to the Fund.
5. Subject to and in accordance with the Certificate of Incorporation of
the Fund, and the Certificate of Incorporation of the Investment Adviser,
respectively, it is understood that Directors, officers, agents and
shareholders of the Fund are or may be interested in the Investment Adviser
(or any successor thereof) as Directors and officers of the Investment Adviser
and its affiliates, as stockholders of Keystone Investments, Inc. or
otherwise; that Directors, officers and agents of the Investment Adviser and
its affiliates, or stockholders of Keystone Investments, Inc. are or may be
interested in the Fund as Directors, officers, shareholders or otherwise, that
the Investment Adviser (or any such successor) is or may be interested in the
Fund as shareholder or otherwise; and that the effect of any such adverse
interests shall be governed by said Certificate of Incorporation of the Fund
and Certificate of Incorporation of the Investment Adviser, respectively.
6. The Investment Adviser may enter into an agreement to retain at its own
expense any other firm or firms to provide the Fund investment advisory
services, if such agreement is approved by a vote of a majority of the
outstanding voting securities of the Fund and by the vote of a majority of the
Directors of the Fund who are not parties to such agreement or interested
persons (as that term is defined in the Act) of the Fund or of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
7. This Agreement shall continue in effect after December 10, 1998, only
so long as (1) such continuance is specifically approved at least annually by
the Board of Directors of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund, and (2) such renewal has been
approved by the vote of a majority of Directors of the Fund who are not
interested persons (as that term is defined in the Act) of the Investment
Adviser or of the Fund, cast in person at a meeting called for the purpose of
voting on such approval.
8. On sixty days' written notice to the Investment Adviser, this Agreement
may be terminated at any time, without the payment of any penalty, by the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Fund; and on ninety days' written notice to the Fund,
this Agreement may be terminated at any time, without the payment of any
penalty, by the Investment Adviser. This Agreement shall automatically
terminate upon its assignment (as that term is defined in the Act). Any notice
under this Agreement shall be given in writing, addressed and delivered, or
mailed prepaid, to the other party at any office of such party.
9. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have been
approved by a vote of a majority of the outstanding voting securities of the
Fund. A "majority of the outstanding voting securities of the Fund" shall
have, for all purposes of this Agreement, the meaning provided therefor in the
Act.
10. Any compensation payable to the Investment Adviser hereunder or any
reimbursement by the Investment Adviser of expenses of the Fund pursuant to
paragraph 3 above for any period other than a full year shall be
proportionately adjusted.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the day and year first above written.
KEYSTONE PRECIOUS METALS HOLDINGS, INC.
By:
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Name: XXXXXX X. XXXXXXX
Title: Chairman of the Board
KEYSTONE INVESTMENT MANAGEMENT
COMPANY
By:
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Name: XXXXXXXX X. VAN ANTWERP
Title: Senior Vice President
